Prediction market operator Kalshi says it has been placed in an “impossible position” after the U.S. derivatives regulator intervened to block the company from canceling trades for Michigan users, directly contradicting a recent state-court directive.
On June 29, Ingham County Circuit Court Judge Rosemarie Aquilina ordered Kalshi to stop offering sports-betting contracts to Michigan residents while litigation proceeds over whether those contracts violate state sports-betting laws. The Commodity Futures Trading Commission (CFTC) then issued an order on Tuesday directing Kalshi not to comply with the state injunction and to continue operating.
Robert DeNault, Kalshi’s head of enforcement and legal counsel, said on X that the company had already unwound the trades to follow the Michigan court’s order. “We are being put in an impossible position, looking to follow state court orders that may contradict our federal regulatory obligations. We did not have a choice,” he said, adding that the CFTC decision was “disappointing” and “unfair to Kalshi.”
The conflicting directives underscore a larger, unresolved jurisdictional dispute between the CFTC and nearly two dozen state regulators over authority to oversee prediction markets. The CFTC has characterized Michigan’s move as the first instance of a state attempting to interfere with executed derivatives transactions.
CFTC Chair Michael Selig argued canceling already-executed trades would be unprecedented and damaging to market integrity. “Canceling trades that have already been executed is an unprecedented step that risks a cascading effect on the entire marketplace and undermines the certainty in contracting that is a necessary component of a functioning market,” Selig said, adding that the commission will not tolerate state or state-court actions that pressure registered entities to violate the Commodity Exchange Act and CFTC regulations.
Speaking on Fox Business, Selig stressed the importance of maintaining the CFTC’s regulatory authority over prediction markets and noted the agency’s willingness to litigate. “We’ve sued nine states now, and we’ll continue to sue any state that attempts to impose criminal or civil fines against CFTC-registered exchanges,” he said.
A Kalshi spokesperson told Reuters the company is reviewing the CFTC’s order and weighing its next steps.
The dispute adds to ongoing debate about how prediction markets should be regulated and which level of government—federal or state—has the final say when rules clash.
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